US Stimulus package and Indian Industry

The almost $900-billion American stimulus plan for reviving the beleaguered economy has many interesting and intriguing aspects and will be analysed and discussed for long. One which is best for India is that most of the jobs (create or save 111,300 jobs) will be created in private sectors.
Image courtesy: http://uk.biz.yahoo.com/03022009/323/photo/main-points-president-barack-obama-s-economic-stimulus-plan.html
Also three hi-tech areas have been specifically mentioned in the new plan —
1. The computerisation of medical records
2. The creation of smarter electrical grids
3. The expansion of high-speed broadband access to the Internet in rural and undeserved communities.
While last point could seem as a favour to the already favour-able Obama public and not actually for reviving economy, mind you that much of today’s economic crisis is because of sentiments at various levels which are working against reforming measures and so letting the situation worsen by itself ex. Banks are not offering loans even to some enable candidates in fear of loosing money and so actually helping in making economy poorer. This is the time for creating new jobs which is one of the major actions for bringing economy back to its feet. So you don’t know, may be the least important point might turn out to be the revolutionary one in future. Do you think different?

With advances in Internet to bring availability of unlimited broadband will change the course of many industries like education, entertainment and many other businesses. Long distance learning could prove useful for India where services can be provided by IT giants and intellectual people of India can leverage technology to find employment (at reasonably good price:)).

New $11 billion amendment to help auto industry will surely help India as many of big auto makers are client for Indian industry (mainly IT). Improvement in health of General Motors will surely means some good news for Indians who are directly (India operations) or indirectly (IT Vendor) working for GM. Aid to create new highways and improving infrastructure will also in turn motivate increase in sale of automobiles which is part of this stimulus package.

Business using new concept like cloud computing can cut cost of their current application licenses and provide services on a more global sense. While US jobs will increase for new opportunities in health care, infrastructures and networking, India can support at lower level providing services in area where it is expert.

What are your views on this stimulus package – how this will help India and especially IT?

India IT Future in 2009

Indian IT industry has mature a lot from time when it started in 70s with body shopping. Though it looks a bad term now a days, this was the crude face of today's IT at that time where capable people were offering their services to needful client of US. Today, IT industry not only provide maintenance service and customised solution, but looking forward to partner with client and get involved in strategic thinking for benefit of business. It is just not offshoring anymore.

If things have been good for some more time, we could have seen Infosys, Wipro and other bumping their shoulders with IBM, Accenture for consulting assignment. With economic recession slowing down growth of industry, what should we expect in 2009 for India? Instead of making a blind attempt, it is better to look into few of facts and then devise a plan to battle in this ground. I am hopeful that if you are in software industry, this post will help you organise your thinking and make a better decision.

While 30-40% revenue of Indian IT was coming from BFSI segment, as some of major player of this sector are going down, there will be a big impact on Indian IT firms. Situations ranging from job cut, downsize, slowdown to domain change can occur. While subprime lending could be said a result of mere greed, it is also asking for a better solution in loan and credit area for better governance and long term view. Going forward, it might not be just maintenance, but more money will be pushed for innovation which can help improving core systems. Most of BFSI applications are decade old which are not efficient in fast growing global economy and innovation will be the key for dominating in new era.

Indian IT firms are majorly operation from SEZs. It is planned to end Tax holiday for these companies in 2010 which will shoot expenditure cost for these companies and bring down profit margin by a great extent. While companies are trying to extend it, it would not be good for Indian society to depend on it for long and keep its eye closed on this fact. IT companies need to think of increasing growth and minimizing expenditure at other places then avoiding tax to Indian govt. If all these companies will start giving tax to govt. growth in other sectors could be increased which will help Indian society in general. Be ready to expect some impact of this on your salary in 2010 or 2011.

China is next emerging country for IT services. While it is starting on field where India has matured, its threat should not be ignored for competition. Indian companies have already thought of taking its advantage and major giants like Infosys have opened development centers in China for future time. If it grows, they will be sharing the profit from these locations. Only one thing can keep us ahead in race and that is up-the-ladder services and strategic partnership with client. If we keep working in down the chain in service ladder, China will soon take over and give you a hard time.

Onsite is not the only charm of industry. With many of Indian companies (other than IT) are making their presence globally, it is time to look into domestic market and slot in your position for future. Idea has given a multi year $80 billion contract to IBM for its IT service management. Why not one of our Indian company? Because while we were trying in US for opportunity, an US company bargained domestic work out of India. Reliance, TATA, ICICI and many others are now global companies and should have a lot of need of IT support. These are nowhere less in revenue than any US or Europe company, so don't underestimate our domestic market. Even SBI could give a fight to any international bank for its customer count and money it handles.

And as I started, this is era of automation. Lame coding is outdated in current time. You need to be sensible to client business and provide a solution which could be mapped to a final income. If you are not thinking in that line, you are not growing up and cannot keep up with new race which is going to begin. So sharpen your skill, look for long term opportunity and make your position to be in front when race starts.

Wish you a happy and prosperous future of 2009. Good luck.